All Forum Posts by: Jeffrey Hanson

thank you and I understand what you're saying, but this is my situation. this is my third lender, and i'm sick of having my credit hit by hard inquiries. we need a place to live before i start working in stl right before christmas. this got me a closing three weeks before christmas. ive already got the HELOC, its drawn about $14,000. if you know a bank that would lend me $200K on $42k base pay W2 and close by 12/2, id be happy to talk to them. i'm just wondering if its better to use my HELOC for a bigger down payment to make my loan smaller, or not, as far as making monthly payments goes.

hey i am under contract on my first investment property, currently a 4/2 & 2/1 4600sqft duplex with a pretty easy conversion to 2/1, 2/1, 2/1 triplex.

my wife and i are going to live in the bigger half and rent the smaller unit to take a chunk out of the mortgage.

a family friend is fronting us the cash for the sale so we can close before the holidays, but i am taking out a mortgage to pay them back and using my existing HELOC for the down payment. i paid $120k cash for my house in VT in 2015, and in covid crazy times it was appraised at $180k for the HELOC. we are keeping the VT house, maybe airbnb or just rent long term. Anyway I have about $135k available on my heloc. sale price on the duplex is $279,000, so 20% is about $56k. the house is perfectly livable as-is, but at $60/sqft and properties on the block selling for $140/sqft i think there is room for some forced appreciation.

the building is currently a three-floor duplex townhouse, one unit is the ground floor and unit two is the top two floors. all floors are basically the same floor plan. the second floor has a kitchen/laundry stacked above the first floor kitchen/laundry. on the third floor, the room is in the same place and empty, but utilities (water gas electric) are already run and in place for adding a third kitchen/laundry, so conversion to triplex would be simple as installing cabinets and appliances and building an exterior staircase up to the second floor rear deck. the three 2bed/1bath units would rent for $1000-$1200 a month each, conservatively. we would have to find somewhere else to live for that to happen, but that is our 1-3 year goal anyway. 

would it be better to make the bank loan smaller with a bigger down payment from the HELOC? currently HELOC rate is at 3.00%, down from 3.99% a month ago when the 6 month initial lock ended (i have over 9 years left on my draw period). now the rate is variable. the bank is hinting that the rate on the mortgage will be around 3.5% fixed. i don't qualify for traditional mortgage on my dti (but i do double my income with overtime and bonuses, and my wife will have a new income as well once we relocate) so our family friend is cosigning on the mortgage with me. the bank is writing it internally at 15yr with a choice between amortized or balloon. the building will need a new roof in about 5 years, and leaving $35k in the HELOC for that would keep me happy, so i'm willing to go up to $100k down payment if it makes sense. that would change my loan to $179k from $223,200, but also would tap any funds i might have for improving the property other than the roof, like fencing in the backyard and converting the third floor to its own unit. the new rubber roof would be more like $20-$25k but i like to be conservative.

i have heard of people using their heloc to pay down their mortgage principal, which i could also do, but it seems to be a gimmick, and even if not may it be easier to just get a smaller loan amount to start? the family friend wants no interest, just to be repaid when we can. lucky for us!

thanks for any and all guidance

jeff

hi bp

i'm moving to STL for work, so my wife and i decided to house hack a multi fam. we made an offer and were accepted on a duplex in benton park. this will be our first investment property. does anyone know a good insurance agent/company? it seems like the NREIG is a little above my head, or should i give them a try?

thanks!

jeff

 hi Tom and thanks for the encouragement! I’ll keep on working and learning and updating here as things progress. I’m sure you have some solid student rental experience operating in Burlington. 

 Hey thanks Jon

i was a little long-winded but figured id lay it all out in a first post so if anyone was checking into me later on they'd be able to get the whole story. 

ive looked at keene, and a few other spots around VT/NH/MA but i feel like im priced out of new england unless i find a forclosure and do rehab myself, and that’s more than I can take on right now. I will keep on learning and running numbers until something fits. And I’ll focus now on making some local contacts.

Jeff

hi everyone, this is my first time posting to bigger pockets

i am an airline pilot in my mid 30s and looking to create a new life for my wife and myself and our baby on the way. i have dove deep on BP and been scouring the bookstore and the podcasts and learning as much as i can about investing in real estate. 

we currently live in a 1b/1ba home we own, and no longer owe any debt. i bought it for $120k in 2015 with 2br/1ba, met my wife the next year, she moved in and we gutted it and rehabbed it ourselves (aside from some structural flooring stuff and the final electric and water connections) and blew the tiny bathroom out into the adjacent bedroom, making the house a 1br/1ba. we did all the framing and flooring, paint and drywall and fixtures ourselves. we plan to add an additional bedroom or two, and possibly another bathroom, in the unfinished attic at some point. 

i was granted a HELOC for $120,000 with my local bank after it got reappraised a month ago at $163,000. i think we spent around $25,000 on the rehab so i'm feeling pretty darn happy about the situation. obviously the covid exodus from boston and new york have pumped real estate prices but we dont really plan on selling any time soon; but possibly renting it out if i get relocated for work.

i am trying to find my first investment deal, and my wife and i have narrowed down our plan to aim for a rental with cosmetic rehab and solid tenant base. we thought about house hacking. i'm not sure of where i'll be sent next with work, but i will be sent somewhere else soon. our local market (vermont) is not very landlord friendly so we are looking at long distance, self-sufficient rental as our first investment. i am leaning toward student rentals, and after searching and comparing prices and stuff we have chosen to focus on a few different college town markets in the TN, KY, WV region. 

i have found a property i think might fit. its a triplex with three 1br/1ba units and off street parking, split utilities, w/d in each unit, located a half block from campus. it seems in decent shape, its been on the market over 200 days, and is listed at $190,000 in a market i believe i can ask at least $750 per unit for rent, which would bring my cash flow to near $1000/mo if i used the calculator correctly.

what next?? i couldn't find any agents on BP close to the town, and we live in northern New England so its not exactly a day trip to go see it, although we can fly standby on any airline (a benefit we plan to use to our full advantage in this new venture). 

so this would be a long-distance investment... i guess i should call some local lenders, property managers and agents to see what they think? i know lots of people shy away from student rentals because of potential for damages and high turnover and stuff, but someone is making money doing it so it might as well be us? 

students deserve nice places to live. we aren't trying to be slumlords but i do realize that students probably have slightly lower expectations than other types of tenants, so i feel we wont need to break the bank in the level of finishing details like we did on our own home but we will provide housing that is clean and safe and attractive. also thinking we can use some creative materials and methods to make the units party-proof. maybe we get lucky and find some long term professors or grad students and don't have to do annual turnover on every unit. even so, i budgeted 8% for property management after watching david greene's webinar yesterday.

the heloc would allow for an easy down payment and a nice buffer for rehab, and i have 750+ credit score and good wage earning history, so i think a conventional loan should not be a problem to obtain. a cash out refi might be an option on the horizon if we decide to really crank a proper rehab but the units (from the pictures i saw) are livable as-is.

should i be more specific here on the address/market to get better help? is someone gonna snipe it from me if i am?

should i post this in another category forum? should i abandon the student rental idea altogether?

thanks for any and all insight, and for all the help so far. BP is amazing.

jeff